Falconbridge grounds Kidd for eight weeks (February 25, 2003)

Citing a poor zinc market, Falconbridge (FL-T) reports that it will extend to eight weeks the planned two-week maintenance shutdown of its zinc refining operations at the Kidd metallurgical site in Timmins, Ont.

Daniel Picard, General Manager of the Kidd Metallurgical Division, said in a prepared statement, “The combination of low revenue from treatment charges and metal premiums, high operating costs and low metal prices has made it more attractive to take an extended maintenance and summer shutdown.”

Falconbridge said the exact dates of the shutdown, and the impact on the operation’s 297 employees, will be detailed in April.

The two-week maintenance shutdown, originally slated for May, allows for maintenance to be completed and avoids high operating costs due to seasonal plant restraints, vacation scheduling, and energy costs. The new extended closure is also aimed at offsetting a supply shortfall for 2003, allowing the refinery to build up inventory and operate well into next year.

The Kidd refining plant normally supplements the Kidd mine’s zinc concentrate supply with concentrate mainly from Quebec and sometimes South America, but Picard said this option is only economic when concentrate treatment terms and operating costs are favourable.

Falconbridge also warned that if current market conditions continue, it would consider a similar shutdown next summer.

During 2002, the Kidd Creek operation chipped in an operating loss of $78 million, or $14 million more than a year earlier despite increased mine production and record volumes of refined copper and zinc. Kidd Creek’s cash costs averaged US62 per lb. during the year.

Overall, Falconbridge earned $73 million (or 34 per share) during 2002, up from 16 million (2 per share) in 2001. Revenue between the two periods climbed to $2.4 billion from $2.1 billion on stronger nickel and copper prices.